(Finance) – The United States Securities and Exchange Commission (SEC) has announced accusations against the well-known activist investor Carl C. Icahn and his publicly traded company, Icahn Enterprises L.P. (IEP), for not having disclosed information relating to Icahn’s IEP securities promises as personal margin loan guarantee worth billions of dollars under settlements with various creditors. IEP and Icahn agreed to pay $1.5 million and $500,000 in civil penalties, respectively, to resolve the SEC charges.
According to the SEC, from at least December 31, 2018, through the present, Icahn, who is IEP’s controlling shareholder and chairman of the board of IEP’s general partner, pledged approximately 51% to 82% of IEP’s outstanding securities as collateral for billions of dollars in personal margin lending under agreements with various creditors. Despite Icahn’s various margin lending agreements and amendments, IEP did not disclose Icahn’s pledges of IEP securities as required in its Form 10K until February 25, 2022. Icahn also failed to file amendments to Schedule 13D describing his personal margin lending agreements and amendments, which date back to at least 2005, and did not attach the required collateral agreements. Icahn’s failure to file the required amendments to Schedule 13D has continued at least until July 9, 2023.
“The federal securities laws imposed independent disclosure requirements on both Icahn and IEP. Those disclosures would have revealed that Icahn had pledged more than half of IEP’s outstanding shares at any one time “- said Osman Nawaz, head of the Complex Financial Instruments Unit (CFIU) of the SEC’s Enforcement Division. – Due to both disclosure failures, existing and potential investors were deprived of the required information.”